RIM stock rises 10% on new takeover talk

12/21/2011 11:11 EST
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Updated
02/20/2012 05:12 EST

CBC

Shares in Research in Motion Ltd. gained more than 10 per cent on Wednesday morning after a series of reports suggested major international firms were considering acquiring the Canadian wireless device maker.

Reuters reported Tuesday that RIM recently rejected overtures from online seller Amazon.com to acquire the company. According to unnamed sources, the company board doesn't want any outside influence, and would prefer RIM turn itself around by focusing on core strengths.

That caused RIM shares to take off in after-hours trading, although it's not immediately clear why Amazon would have an interest in the company. "That one's a bit out of left field, I admit," Northern Securities analyst Sameet Kanade said.

Amazon's latest Kindle device was powered by Google's Android operating system, so a foothold in the BlackBerry market would give Amazon a new platform for their core online selling business. "I suspect they're trying to gain traction on the tablet side," Kanade said.

RIM's co chief executives, Mike Lazaridis and Jim Balsillie, have long bristled at the notion of any sort of takeover of the firm they founded almost 20 years ago in Waterloo, Ont. The duo currently control about 10 per cent of RIM's more than 500 million shares.

On Wednesday morning, RIM shares were trading at $14.30 on the TSX, a rise of $1.40 or nearly 11 per cent. Before that surge, RIM shares had tumbled to their lowest point in eight years.

Activist investor Jaguar Financial Corp, which owns a signficant stake in the company, has pushed for RIM to break itself up and sell off non-core assets to boost its stock price. That's another option the company has thus far rejected.

Other talks fizzle

Nokia and Microsoft have also long been rumoured to have an interest. The Wall Street Journal reported Wednesday that the two companies recently considered a joint bid for the firm, but those talks, too, have seemingly fizzled.

Kanade expects any deal would be a hostile takeover. "You'd have to go to the [Wall] Street at about $20 per share," he said. "Maybe at these levels somebody would be willing to go hostile, because that gets rid of a lot of headaches."

When asked for comment on the reports, RIM elected not to speak to CBC News.

"RIM’s standard policy is to decline comment on rumours and speculation," a company spokesman told CBC News.